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Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title Competition in agricultural markets: an experimental approach
Organization Unit
  • Lorenzo Casaburi
  • Tristan F Reed
  • English
Institution Centre for Economic Policy Research
Series Name CEPR Discussion Papers
Number 11985
ISSN 0265-8003
Number of Pages 58
Date 2017
Abstract Text This paper develops an experimental approach to measure competition among intermediaries in agricultural markets, based on the random allocation of subsidies to traders. We show that, in individual-level randomizations with competitive spillovers, treatment-control differences in prices can inform an intuitive test of the degree of differentiation among firms. In the context of the Sierra Leone cocoa industry, traders compete by providing farmers credit, as well as through prices. Even when accounting for both the price and the credit margin, differentiation among traders is low. By combining the experimental results with quasi-experimental estimates of the pass-through rate, we then estimate market size the effective number of traders competing for farmers' supply and we find it to be substantially larger than the village. These results are consistent with a view of competitive agricultural markets.
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Keywords Agricultural markets, competition, field experiments, interlinked transactions, intermediaries